Signing Bonus +P o Annuity + Offer 1:$918, 665 immediate signing bonus $850, 000 at the end of each year for the next 5 years. Offer 2:$209,333 immediate signing bonus $100,000 at the end of Years 1
through 4$150,000 at the end of Years 5 through 10$ 1,000,000 and the end of Years 11 through 40 Offer 3: $1,003,733 immediate signing bonus $500,000 at the end of Year 1$ 1,000,000 at the end of Year 2 $1,500,000 at the end of Year 3 $2,500,000 at the end of Year 4 $168,665 bonus for any year Luke is selected to play in the Pro Bowl All Star game. Canadian Football League $1,118,665 immediate signing bonus $2,000,000 at the end of Years 1 through 3. Only signing bonus is guaranteed. P o Pro Bowl= Total Contract Value 1,003,733+4,114,500+133,667=$5,251,900Correct Answer:$5,251,9 00. Now consider the Canadian Football League and solve for NPV of full contract. Which of the four contracts offers the highest present value?
a. The 1st contract from the U.S. team.
b. The 2nd contract from the U.S. team.
c. The 3rd contract from the U.S. team.
d. The contract from the Canadian team.